Correlation Between Hydrogen Refueling and Eramet SA
Can any of the company-specific risk be diversified away by investing in both Hydrogen Refueling and Eramet SA at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Hydrogen Refueling and Eramet SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hydrogen Refueling Solutions and Eramet SA, you can compare the effects of market volatilities on Hydrogen Refueling and Eramet SA and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Hydrogen Refueling with a short position of Eramet SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hydrogen Refueling and Eramet SA.
Diversification Opportunities for Hydrogen Refueling and Eramet SA
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hydrogen and Eramet is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Hydrogen Refueling Solutions and Eramet SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eramet SA and Hydrogen Refueling is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Hydrogen Refueling Solutions are associated (or correlated) with Eramet SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eramet SA has no effect on the direction of Hydrogen Refueling i.e., Hydrogen Refueling and Eramet SA go up and down completely randomly.
Pair Corralation between Hydrogen Refueling and Eramet SA
Assuming the 90 days trading horizon Hydrogen Refueling Solutions is expected to under-perform the Eramet SA. In addition to that, Hydrogen Refueling is 1.36 times more volatile than Eramet SA. It trades about -0.09 of its total potential returns per unit of risk. Eramet SA is currently generating about -0.06 per unit of volatility. If you would invest 7,419 in Eramet SA on September 3, 2024 and sell it today you would lose (2,354) from holding Eramet SA or give up 31.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hydrogen Refueling Solutions vs. Eramet SA
Performance |
| Timeline |
| Hydrogen Refueling |
| Eramet SA |
Hydrogen Refueling and Eramet SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hydrogen Refueling and Eramet SA
The main advantage of trading using opposite Hydrogen Refueling and Eramet SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hydrogen Refueling position performs unexpectedly, Eramet SA can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Eramet SA will offset losses from the drop in Eramet SA's long position.| Hydrogen Refueling vs. Hydrogene De France | Hydrogen Refueling vs. Neoen SA | Hydrogen Refueling vs. Voltalia SA | Hydrogen Refueling vs. OVH Groupe SAS |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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